Montana LLC Tax Filing Requirements & Annual Report

A Montana Limited Liability Company’s (LLC) state and federal tax obligations depend on its chosen tax classification, which dictates which forms are filed with the Internal Revenue Service (IRS) and the Montana Department of Revenue. These tax duties are separate from other state filings required to keep the company in good standing.

Default Federal and State Tax Classification

By default, the IRS treats an LLC as a pass-through entity, where profits and losses are passed to the owners’ personal tax returns. For a single-member LLC (SMLLC), the default classification is a “disregarded entity,” treated as a sole proprietorship for tax purposes. The owner reports business income and expenses on Schedule C, filed with their federal Form 1040, and this net income flows to the Montana Individual Income Tax Return, Form 2.

For an LLC with multiple owners, the default tax classification is a partnership. These LLCs must file an informational return with the IRS using Form 1065. Each member then receives a Schedule K-1 and uses this information to report their income on personal federal and state tax returns. In Montana, these LLCs file Form PTE, the Montana Pass-Through Entity Tax Return.

Montana-Specific Pass-Through Entity Requirements

Montana offers an optional Pass-Through Entity (PTE) tax election that allows partnerships and S corporations to pay state income tax at the entity level. This election can be a tool for members to manage their state and local tax (SALT) deduction limitations on federal returns. The LLC makes this binding election on its Montana Pass-Through Entity Tax Return.

An LLC is also required to withhold Montana income tax on the Montana-source income distributed to any nonresident member. This withholding is handled through Form PTE. However, nonresident owners can be exempt from this withholding by filing Form PT-AGR, the Pass-Through Entity Owner Tax Agreement, with the Department of Revenue.

Electing Alternative Tax Treatment

An LLC can elect to change its tax classification. By filing Form 2553 with the IRS, an LLC can elect to be taxed as an S Corporation. While profits and losses are still passed through to the owners, this structure requires filing the Montana Pass-Through Entity Tax Return (Form PTE). This election can offer tax advantages related to self-employment taxes for the members.

Alternatively, an LLC can file Form 8832 to be taxed as a C Corporation. This choice makes the LLC a separate tax-paying entity, responsible for paying Montana corporate income tax using Form CIT. This structure subjects the business to corporate tax rates at the entity level. If the corporation distributes its after-tax profits to owners as dividends, those dividends are taxed again on the owners’ personal returns, creating double taxation.

Other State Filing Obligations

Every Montana LLC must file an Annual Report with the Montana Secretary of State by April 15th. This compliance document updates the LLC’s current address, registered agent, and management information. For 2025, the filing fee is waived for on-time reports, but a late filing incurs a $15 penalty. The Secretary of State sends a notice on September 1st to non-compliant businesses, and failure to file within 90 days of the notice can lead to administrative dissolution.

If an LLC has employees, it must complete additional registrations. The business needs to register with the Montana Department of Revenue to withhold and remit state income taxes from employee wages. It must also register with the Montana Department of Labor & Industry to pay state unemployment insurance taxes.

While Montana does not have a statewide sales tax, some LLCs may have local tax duties. Businesses operating in designated resort areas or local option districts might be required to collect and remit specific local taxes, such as resort and lodging facility use taxes.